The MBA degree provides candidates with the tools, skills, networks and opportunities to advance their current career or switch their career path in a new direction. For those looking to use the degree to expand their career opportunities, understanding which business school programs provide the greatest access to which careers is critical.
The Master of Business Administration (MBA) degree began during the industrial era in the United States when the growth in manufacturing increased the demand for middle managers who could direct the production lines. The first MBA program was provided by Harvard Business School, in 1908. It resulted in part from groundwork already underway by other leading schools, including the University of Pennsylvania’s Wharton School—the first U.S.–based business school, established in 1881—and Dartmouth’s Tuck School of Management—the first U.S.–based graduate school of management, established in 1900.
The curricular focus for the first MBA program at HBS was based on FW Taylor’s scientific management, which applied the scientific method in order to increase efficiencies on the factory floor.
Subsequent to the establishment of Harvard’s MBA program, most other top programs were introduced in North America over the following 20 to 30 years, until a steady state of leading schools was established. The MBA degree gained significant popularity after the Second World War, as corporations grew in size and complexity and the need for management education and professional skills became more pronounced.
During the mid-20th century, the degree was less for career switchers and more for corporate America to use to send its high performers to learn and then return, as well as for undergraduate students to attend directly from their undergraduate studies. This was during the heyday of General Motors and similar organizations that supported the MBA degree. It is no coincidence that MIT’s Sloan School is named after Alfred Sloan, of General Motors. The relationship leading MBA programs had with corporate America at the time was similar to the relationships corporate America has now with executive and part-time MBA programs.
During the 1980s and 1990s the degree became more focused on students as “free agents.” MBA students would use the degree to advance their careers. Some would return to their prior industries, but some would use the degree to switch careers. The student was now the main customer, rather than the corporation; leading schools added significant resources to their career management efforts. During this time, the business landscape also experienced a rise in professional services, like management consulting and investment banking, industries that saw the MBA degree as an opportunity to seek out fresh talent. Schools responded to these changes by developing career management centers focused on MBA students, both to help these students seek their desired career path and to help businesses identify their new recruits.
Over the last 20 years MBA corporate recruiting has been defined by two significant shifts: the technology revolution that was spawned by the development of the commercial internet in the mid-1990s and the financial crisis of 2008 that resulted from the deregulation of the financial markets.
Mid 1990s to 2000
The technology revolution that began during the mid-1990s has impacted MBA hiring in two waves.
The 1990s offered strong economic growth, particularly in the United States. Demand for MBA graduates was quite strong from investment banks and consulting firms who were advising traditional firms on how to adapt to the new technology. In addition, many MBA students were attracted to the tech startups forming in Silicon Valley. In fact, a number of MBA students in the late 1990s actually left their MBA mid-stream to launch a dot.com. To exploit market opportunities that the technology revolution provided, timing was crucial for budding tech entrepreneurs during this period. This all put additional competitive pressure on the MBA itself, as potential MBA candidates were attracted to the new opportunities in Silicon Valley. It also impacted recruiting in the traditional fields of investment banking and management consulting in the same way.
To meet growing student interest in entrepreneurship and tech startups, a number of leading MBA programs developed additional entrepreneurial resources to remain relevant during this new reality.
After 2000, and a significant market correction in the technology sector, MBA student’s interest in joining tech startups declined. Instead they began to favor more traditional jobs in consulting and investment banking once again.
2008 and Beyond
The 2008 financial crisis caused a major slowdown across many sectors of the economy. In particular, there was a substantial decline in banking jobs as banks merged or went out of business and jobs were automated or outsourced. More recently, the investment banking industry has experienced a degree of reorganization, as a result of the 2008 financial crisis and increased financial regulation. This has led to a reduction in the opportunities available in this sector, although it continues to be one of the leading sectors to hire from top MBA programs.
Over the last 10 years, there has been a growth in ‘buy-side’ investment funds (private equity funds, hedge funds) that hire MBA graduates, particularly MBAs with ‘buy-side’ investing prior to the MBA, as well as some with previous ‘sell-side’ investment banking experience.
After the financial crisis of 2008, the second wave of the technology revolution began to unfold, which has seen the rapid increase in hiring of MBAs by large technology firms as well as smaller firms on a high-growth trajectory. Google, Apple, Facebook, Amazon and Microsoft—now some of the largest firms in the United States by market capitalization—all hire MBAs in significant numbers. Recruiting at business schools for these firms is now a well-oiled process. Whereas in 2000 when many young professionals were heading to Silicon Valley to mine for internet gold, places like Amazon barely had a formal on-campus recruiting process for MBAs. The technology sector has now become a significant employer of MBAs; at some programs, the technology sector ranks alongside investment banking and management consulting as the top three sectors that hire MBAs.
Management consulting firms remain leading recruiters at top-tier MBA programs. as they continue to focus on helping big multinationals with business strategy. How to use emerging technologies to help their clients’ businesses is a key component of that strategy advice. It’s not unusual for a school to send a third of their class into this field. In addition, about 25 percent of MBA students at top MBA programs will join investment banks or investment firms.
Of course, traditional large multi-national corporations continue to recruit directly from MBA programs as well. Companies such as General Motors, GE, Disney and Ford seek MBAs to fill important roles in marketing (identifying and executing on opportunities in the marketplace), operations (the core aspects of operating a business) and finance (providing the fuel to manage the business and its growth). MBAs are recruited directly into these functional areas or into rotational leadership development roles that are designed to groom the next generation of leaders at these firms.
Professionals hoping to pursue entrepreneurial opportunities are also seeking MBAs, and schools have evolved their offerings over the last 20 years to better serve these candidates as a result of the changes brought on by the first wave of the technology revolution. Entrepreneurship at the MBA level is often focused on the emerging technology sector, life sciences and the biotech domain.
Social impact, non-profit and government opportunities are also appealing to a subset of MBA candidates, as more organizations recognize that business can be the engine of growth and opportunity to address social issues.
MBA recruiting these days is much more diverse than it has been in the past. Whereas 15 years ago, 90 percent of a class might work at one of 30 companies, these days you will see more than 100 companies hiring MBAs at many schools. As a result, the number of corporate recruiters who hire one to two MBAs per class each year has gone up. This is because many schools learned very important lessons during the first wave of the technology revolution and during the 2008 financial crisis and have really diversified their career services approach as a result. By sending an equal number of folks into consulting, banking and tech, and then decent chunks of the class into Fortune 500s, entrepreneurship, social enterprise, healthcare/biotech, they are better shielded from over-dependence on one or two sectors.